Pakistan’s liquefied natural gas (LNG) demand has declined sharply as power producers avoid taking deliveries, creating a supply glut that has impacted the local energy sector. The LNG purchase agreements signed by Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL) include strict 100% take-or-pay clauses, forcing the state to receive cargoes regardless of demand. Meanwhile, the Petroleum Division has attributed the gas oversupply to changes in agreements by the Power Division, which reduced the offtake guarantee from 66% to 50%, effective January 2025. This policy shift has worsened the mismatch between imported LNG and domestic gas consumption. Private sector firms, which were allowed higher allocations from 10% to 35% earlier this year, remain unable to access sufficient supplies as state utilities resist implementation. As a result, local oil and gas producers are facing curtailment, further deepening losses and raising concerns about energy sector inefficiencies.
Oil and Gas Development Company (OGDC) has been hit particularly hard by the LNG oversupply, with management revealing an estimated Rs43 billion revenue loss during FY25 due to reduced gas offtake. Curtailments by Sui Northern Gas Pipelines Limited (SNGPL) cut actual production to 30,919 barrels per day of oil and 652 million cubic feet per day of gas, compared to potential volumes of 32,709 bpd and 743 mmcfd respectively. Despite this setback, OGDC announced its highest-ever dividend payout of Rs15.05 per share for FY25, signaling financial resilience. The company also shared optimistic growth plans, including upcoming production from the Wali block, Spinwam field, and Abu Dhabi’s Adnoc block. With future targets set at 50 mmcfd of gas and 5,000 bpd of oil by FY27, OGDC is focusing on exploration in high-risk regions like Balochistan and Khyber-Pakhtunkhwa. Analysts maintain a “buy” stance, projecting stable growth once circular debt and gas glut issues are resolved.
Pakistan’s LNG Glut Sparks Gas Curtailment OGDC Reports Rs43 Billion Loss Amid Falling Demand
